Matiere SAS v. ABM Precast Solutions Ltd: A Reminder How English Courts Interpret and Enforce Express Obligations of Good Faith in Commercial Contracts

In June 2025, Alexander Nissen KC (sitting as a Deputy Judge of the High Court) released a significant decision from the English Technology and Construction Court on express good faith obligations in commercial contracts.  The decision considered whether Matière SAS (a French designer, fabricator and installer of civil engineering structures) had breached express obligations of good faith under various agreements it had entered into with ABM Precast Solutions Ltd (a UK engineering company which specializes in pre-cast reinforced concrete products) in order to bid together for work on the United Kingdom HS2 “Green Tunnels Project.” 

            In short, the Court held that Matière had acted in breach of its express good faith obligations.  The Court also accepted that ABM had a real and substantial chance of being awarded the sub-contract, with that chance diminishing over time.  However, the Court held that the breaches did not cause ABM loss as the bid for the project would have been rejected anyway.

            This decision is a useful example on the interpretation and enforcement of express good faith obligations and a reminder that an innocent party, in order to be awarded damages, needs to ensure it can prove not just breach(es) of the good faith obligations but also that the breach(es) actually caused the loss claimed.

Background

The claim arose from the fallout of the joint venture arrangement formed between Matière and ABM in order to bid together for work as a joint venture subcontractor for tunnelling works for the troubled HS2 project. 

            To give effect to that arrangement, the parties entered into a Collaboration Agreement and a Consortium Agreement.  Both agreements included clauses with express good faith obligations.  By way of example, Clause 3.3 of the Consortium agreement provided: “In the course of their performance of their obligations pursuant to this Agreement each of ABM and Matière shall act in good faith toward the other and use reasonable endeavours to forward the interests of the Consortium….”

            The joint bid failed and Matière subsequently entered into a subcontract without ABM for installation work relating to the project. ABM blamed Matière for the failure, in particular by allegations that Matière acted in breach of good faith during the lengthy and complicated bid process. 

            Whereas Matière initially brought the claim against ABM for unpaid fees, ABM brought a counterclaim alleging breach of good faith obligations and claiming loss of chance to win the bid.  

Breach of Good Faith Obligations?

ABM asserted that Matière was in breach of the two Agreements in three material ways:

1. By undermining in various ways the plan (contained in the bid) to build a bespoke factory to manufacture the pre-cast concrete;
2. By giving in 2019 or 2020 a slide presentation in respect of the plans for the project to another company which was a key competitor of ABM and which was ultimately             engaged for the concrete elements for the project; and  
3. By entering into a further Professional Services Contract and sub-contract for the same project.

            The Court, having considered the recent guidance of the Court of Appeal in Re Compound Photonics Group Ltd [2022] EWCA Civ 1371, held that both agreements contained enforceable express duties of good faith.  In particular, the Court found that the relevant clauses required the parties to (1) act honestly with each other, (2) not engage in conduct which would be considered commercially unacceptable to reasonable and honest people, and (3) keep fidelity to the bargain (because the common purpose and aim of the parties was apparent from the contract). 

            The Court held that Matière had acted in breach of its good faith obligations by undermining the joint venture bid.  In particular, the held that Matière deliberately undermined the choice of particular factory to the project’s main contractor without ABM’s knowledge, agreement or input, including by criticizing the site’s suitability and by offering alternative site options.  Such actions were considered to be dishonest and/or regarded as commercially unacceptable and were also not keeping fidelity to the bargain.  Rather, the actions had the potential to render the bargain worthless or significantly less valuable.  ABM’s other allegations of breach (such as in relation to the competitor presentation) were not accepted by the Court.

            In summary, this decision demonstrates that conduct which is dishonest, commercially unacceptable, or which undermines the contract’s purpose may be held to be a breach of express good faith obligations.  That is, a breach of good faith can arise not just when there is dishonest conduct.

Loss and Causation?

Having determined that there were breaches of both the Consortium Agreement and the Collaboration Agreement, the Court turned its mind to the question of loss and causation.

            ABM’s primary claim was for loss of the chance in winning the bid, which it said was “virtually certain” but became “nil or virtually nil” after the alleged breaches.  ABM valued its lost chance at 90% applied to its claim for lost profit primarily pleaded as a loss of GBP 18.92m.

            However, the Court held that the breaches did not cause ABM to lose any real and substantial chance of securing the subcontract and therefore the counter-claim was dismissed.  The Court considered that, overall, it had to be satisfied that ABM had a real or substantial chance (and not a non-existent nor negligible chance) of winning the subcontract and that the breaches were the effective or dominant cause in a reduction of that chance.  In summary:

• The Court was satisfied that at the time of the earliest breach there was a real and substantial chance of winning the subcontract and that within six months there was no real prospect at all of winning the subcontract (rather the prospects had been reduced to negligible).
• However, the Court considered that, on the evidence, ABM had not proven that any of the breaches played a material part in the reduction of ABM’s prospects of being appointed. By way of example, the Court held that whenever Matière undermined the factory, it did so in response to or at the behest of the main contractor.  Serious concerns about ABM were held within the main contractor for reasons unconnected with Matière.  Further, there were other factors which occurred over time so as to diminish to non-existent such prospects of winning the subcontract.

            This decision is a useful demonstration of the application of the relevant principles to a claim which arises from a course of conduct over an extended period.  Further, it demonstrates the challenges that can exist for parties seeking substantial damages based on a loss of chance caused by breach of good faith obligations and reiterates that care should be taken in the preparation of a sufficient evidential basis to support a claim.   Claimants must show that the breaches were the effective cause of the loss rather than any other factors and cannot simply hope to rely on seemingly prejudicial allegations of breach of duty as a basis for claiming loss.